Fiscal Status of Kobe City. October 2017

Transcription

1 Fiscal Status of Kobe City October 2017

2 Contents 1. Overview P3 2. Fiscal Profile P7 3. Kobe City s Local Government Bonds P12 4. Appendix P17

3 1.Overview

4 Overview of Kobe City Kobe City Area km2 Population 1,530,858(As of Apr 2017) Households 711,115 (As of Apr 2017) Average temperature 16.7 Kobe is one of the major designated cities in Japan Kobe is the 6 th largest designated city in terms of GDP scale in Japan (JPY 6.2 trillion in FY2014) All modes of transportation (land, sea and air routes) are available and interlinked Mt. Rokko Bullet train to Osaka Shin-Kobe st Sannomiya st Kobe Port Kobe Port is the second largest in Japan Comparison of the number of handled containers (million TEU) Bullet train to Fukuoka Kobe Airport Kobe Airport 1hr from Haneda Flights to 7 main regional airports in Japan 18min from city center by train (Port liner) 30min from Kansai international Airport by train Hyogo Nagoya - 3 -

5 Demographics of Kobe city Transition of the population in Kobe city Kobe outperform the whole Japan s population trend (million people) GDP trends of Japan s main cities (2001 = 100) Kobe s GDP outperforms that of 2001 Kobe s GDP: USD51bn (FY2015) Similar scale of Luxemburg or Latvia in OECD Estimated Population Top 10 ranking among the government-designated cities (million people) (JPY thousand) Gross city product and Citizen's income - 4 -

6 Major Corporations Located in Kobe More than 200 global companies have headquarters and business establishments in Kobe Product exports: 6th among the designated cities(food stuffs: 1st among the designated cities) Trade & Industry (Industry Statistics 2015 by Ministry of Economy) (JPY trl) Top 10 ranking among the designated cities The Waterfront Area boasts outstanding access with both Kobe Airport and the Port of Kobe, and the Inland Area provides nature-rich suburbs with offices and residential areas close to each other. Kobe s combination of two unique business developments can meet the needs of any individual or company looking to invest. INLAND AREA WATERFRONT AREA (JPY trl) Ranking of government-designated cities for middle industry category 1st 3rd 6th 7th 2nd 4th 3rd - 5 -

7 2.Fiscal Profile

8 Change in Revenue Accounts Kobe has stable city tax revenue which is around JPY 270bn every fiscal year Total revenue of general account has been around JPY 700bn per year and the ratio of city bond revenue remains under 10% (JPY bn) - 7 -

9 Change in Expenditure Accounts Mandatory expenditure accounts for more than half of all expenditure due to the increases of social security related expenses Investment expenditure has been managed under 10% of all general accounts expenditure since its recovery from the Great Hanshin Earthquake (JPY bn) - 8 -

10 Change in Outstanding Volume of Debt Outstanding volume of debt keep decreasing, which shows sound fiscal status of Kobe (JPY bn) - 9 -

11 Liquidity: Status of Sinking Fund Kobe has accumulated its sinking fund under the prescribed rule and the amount reached to around JPY 245bn Kobe has recorded continuous surplus in its primary balance since FY1999 (JPY bn) 250 Sinking Fund Reserves 245 (JPY mn) Surplus in primary balance FY2011 FY2012 FY2013 FY2014 FY2015 FY

12 3.Kobe City s Local Government Bonds

13 Summary of Kobe City s Bond The same rating as Japanese government bond. AA+ by R&I is the highest rating among Japanese municipalities Format: Japanese domestic municipal bond BIS Risk Weight :0% for domestic investors Maturity : 5y, 10y, 20y and 30y Ratings by R&I AAA - AA+ AA Japan(sovereign), Kobe City, Saitama Prefecture, Shizuoka Prefecture, Aichi Prefecture, Tochigi Prefecture Miyagi Prefecture, Fukui Prefecture, Nara Prefecture, Okayama Prefecture, Tokushima Prefecture, Saga Prefecture, Chiba City Transition of the raring of Kobe City by R&I Upgraded Maintaining AA+ January 2007 AA April 2015 AA+ April 2016 AA+

14 Issuance Plan and Historical Volume Kobe has issued 5yr, 10yr, 20yr and 30yr bond in the capital market every fiscal year Historical Public Issuance Volume from FY 2008 (JPY bn)

15 Redemption Schedule Kobe has redemption scheduled for around JPY 50bn every fiscal year until FY2021 as of FY2017 Kobe s redemption schedule (JPY bn)

16 Kobe s New Issues from FY2013 Pricing Date Issuer Issue Date Tenor Currency Amount R&I Coupon Rate Maturity (JPY bn) Rating (%) Offer Price JGB Spread 6-Oct-17 City of Kobe 18-Oct-17 5 JPY 10 AA+ 18-Oct JGB(#325)+11.00bp 4-Oct-17 City of Kobe 16-Oct JPY 10 AA+ 15-Oct JGB(#348)+16.50bp 1-Sep-17 City of Kobe 20-Sep JPY 20 AA+ 18-Sep JGB(#161)+5.00bp 2-Aug-17 City of Kobe 14-Aug JPY 10 AA+ 13-Aug JGB(#347)+14.50bp 12-May-17 City of Kobe 23-May JPY 12 AA+ 20-Mar JGB(#54)+11.00bp 5-Apr-17 City of Kobe 14-Apr-17 5 JPY 20 AA+ 14-Apr JGB(#322)+12.00bp 13-Jan-17 City of Kobe 24-Jan JPY 10 AA+ 23-Jan JGB(#159)+5.00bp 7-Oct-16 City of Kobe 19-Oct-16 5 JPY 10 AA+ 19-Oct JGB(#318)+22.00bp 9-Sep-16 City of Kobe 21-Sep JPY 15 AA+ 18-Sep JGB(#344)+13.00bp 15-Jul-16 City of Kobe 27-Jul JPY 15 AA+ 20-Jun JGB(#51)+12.00bp 3-Jun-16 City of Kobe 14-Jun-16 5 JPY 20 AA+ 14-Jun JGB(#316)+24.00bp 8-Apr-16 City of Kobe 19-Apr JPY 15 AA+ 17-Apr JGB(#342)+15.00bp 15-Jan-16 City of Kobe 26-Jan JPY 10 AA+ 25-Jan JGB(#155)+3.50bp 4-Dec-15 City of Kobe 15-Dec JPY 10 AA+ 15-Dec JGB(#341)+15.00bp 7-Oct-15 City of Kobe 19-Oct-15 5 JPY 20 AA+ 19-Oct JGB(#311)+5.00bp 2-Oct-15 City of Kobe 14-Oct JPY 20 AA+ 20-Sep JGB(#48)+14.00bp 4-Sep-15 City of Kobe 15-Sep JPY 10 AA+ 12-Sep JGB(#340)+12.00bp 15-Apr-15 City of Kobe 24-Apr-15 5 JPY 10 AA+ 24-Apr JGB(#307)+4.00bp 16-Jan-15 City of Kobe 27-Jan JPY 10 AA 27-Jan JGB(#337)+5.00bp 11-Dec-14 City of Kobe 19-Dec-14 5 JPY 12 AA 19-Dec JGB(#305)+3.50bp 3-Dec-14 City of Kobe 12-Dec JPY 13 AA 20-Sep JGB(#44)+15.00bp 9-Jul-14 City of Kobe 18-Jul JPY 13 AA 18-Jul JGB(#334)+5.00bp 3-Jul-14 City of Kobe 14-Jul JPY 12 AA 14-Jul JGB(#149)+4.50bp 4-Apr-14 City of Kobe 15-Apr-14 5 JPY 20 AA 15-Apr JGB(#299)+3.00bp 7-Feb-14 City of Kobe 19-Feb JPY 10 AA 19-Feb JGB(#332)+7.00bp 7-Feb-14 City of Kobe 19-Feb JPY 10 AA 17-Feb JGB(#147)+6.00bp 13-Dec-13 City of Kobe 25-Dec-13 5 JPY 20 AA 25-Dec JGB(#298)+3.00bp 7-Aug-13 City of Kobe 16-Aug-13 5 JPY 20 AA 16-Aug JGB(#295)+3.50bp 4-Jul-13 City of Kobe 19-Jul JPY 10 AA 19-Jul JGB(#145)+6.00bp 10-Apr-13 City of Kobe 19-Apr JPY 10 AA 19-Apr JGB(#328)+2.50bp

17 4.Appendix

18 Fiscal Position of Kobe Current Conditions All four indicators are performing well better than the nationally established standards National Standard 4 Indicators* Description Fiscal 2016 Early warning limit Reconstruction limit Real deficit ratio Amount of general account deficit as a proportion of fiscal scale (Surplus) 3.75% 5.0% Consolidated real deficit ratio Amount of all account deficits as a proportion of fiscal scale (Surplus) 8.75% 15.0% Real debt payment ratio Public debt expenses as a proportion of fiscal scale 7.4% 25.0% 35.0% Future burden ratio Prefectural bond balance as a proportion of fiscal scale 80.0% 400.0% - * With the exception of the Future burden ratio, if national standards are exceeded, national government authorization and additional national government involvement is required to issue bonds

19 Japanese Local Government Bonds Japanese local government bonds have a risk weight of zero as a result of powerful national fiscal backing, a tax system designed to prevent failure and other measures as described below. 1.Local Issue Tax System When determining budgets for each fiscal year, the national government sets forth an estimate of revenues and expenditures for all local governments, and guarantees revenue shortfalls. As part of this system, the national government provides backing for the redemption of the principal and interest of local government bonds, thereby strengthening the repayment capacity of local government bonds by local governments. 2.Bond issuance approval system as an early correction measure Local governments must discuss with the national government before issuing bonds, and receive confirmation that the new bond issuance is reasonable and will not negatively affect the local governments' future ability to repay principal and interest of local government bonds. Outline of Tax Exemption for Non-Residents Tax Exemption for Non-Residents Starting in 2008, with the Article 5-2 Act on Special Measures Concerning Taxation (Limited to the provisions related to nonresidents and foreign corporations), the interest gains on LGBs owned by non-resident or foreign corporations which settled by the book-entry system are exempted from withholding tax. Simplification of tax exemption procedures Non-residents/Non-domestic entities Qualified foreign intermediary (including Clearstream, Euroclear) Specified transfer institution (subcustodian) Director of tax office with jurisdiction over the specified transfer institution

20 General Accounts Change in Revenue Category / FY [JPY bn] City tax 2,741 2,433 2,761 2,929 2,891 2,863 2,756 2,697 2,642 2,517 2,506 2,568 2,626 2,759 2,779 2,731 2,671 2,698 2,665 2,706 2,750 2,719 2,723 Individual citizen tax Corporate citizen tax Fixed asset tax 1,127 1,055 1,171 1,192 1,242 1,272 1,235 1,227 1,207 1,156 1,138 1,142 1,080 1,104 1,115 1,124 1,126 1,131 1,078 1,089 1,106 1,095 1,103 Urban planning tax Other National taxes allocated to local governments Financial index ,107 1, ,140 1,280 1,225 1,253 1,193 1,201 1, City bonds 1,261 6,065 3,267 1,408 1, Bonds for extraordinary fiscal measures Other 5,110 7,714 6,879 5,862 4,923 4,800 4,317 4,022 3,734 3,478 3,578 3,410 3,205 3,200 3,155 3,566 3,306 3,139 3,267 2,983 2,902 3,112 3,142 Revenue 9,715 16,894 14,014 11,231 9,810 9,608 8,904 8,547 8,326 7,922 7,846 7,708 7,201 7,179 7,162 7,826 7,565 7,220 7,433 6,949 6,885 7, fiscal results exclude city bond redemption funds (revenue) related to contribution/loans for the restoration fund

21 General Accounts Change in Expenditures Category / FY [JPY bn] Mandatory costs 3,574 3,393 3,666 3,830 3,681 3,989 4,055 4,137 4,025 4,156 4,319 4,074 3,816 3,800 3,783 3,950 4,038 4,050 3,963 3,833 3,879 4,095 4,102 Personnel costs 1,528 1,570 1,540 1,577 1,554 1,623 1,534 1,566 1,393 1,348 1,325 1,302 1,335 1,314 1,258 1,270 1,221 1,201 1,166 1,104 1,117 1,217 1,197 Social aid costs 1, , ,056 1,134 1,216 1,306 1,319 1,327 1,362 1,396 1,469 1,719 1,784 1,797 1,802 1,853 1,951 1,991 Municipal bonds costs ,248 1,330 1,159 1,319 1,540 1,515 1,498 1,592 1,688 1,453 1,154 1,124 1,129 1,211 1,098 1,065 1, Investment outlays 2,223 5,222 5,104 3,784 2,632 1,973 1,585 1,323 1, Transferred fund Equipment costs, etc. 2,856 7,046 3,886 2,548 2,380 2,694 2,243 2,149 2,233 1,953 1,926 1,856 1,774 1,784 1,710 2,297 1,896 1,635 2,150 1,534 1,469 1,369 1,389 Expenditures 9,362 16,422 13,388 10,854 9,524 9,485 8,769 8,435 8,273 7,870 7,795 7,635 7,072 7,118 7,048 7,768 7,480 7,166 7,359 6,859 6,804 7,006 7,024 Mandatory cost ratio 38.2% 20.7% 27.4% 35.3% 38.6% 42.1% 46.2% 49.0% 48.7% 52.8% 55.4% 53.4% 54.0% 53.4% 53.7% 50.9% 54.0% 56.5% 53.8% 55.9% 57.0% 58.4% 58.3% 2005 fiscal results exclude city bond redemption funds (revenue) related to contribution/loans for the restoration fund

22 For inquiries Public Loan Section, Finance Division, Finance Department, Administration and Finance Bureau, City of Kobe Kano-Cho, Chuo-KU, Kobe TEL: